Updated NEV Quotas for China, Byton on the Ropes, VW's Open Source Dilemma - SAI Newsletter #24
So today and the rest of this weekend is actually a holiday in China – The Dragon Boat Festival (端午节). My family would normally travel somewhere for a few days but with Covid-19, it looks like we will sit tight at home and just visit a park or two. With the WFH situation, holidays and days, in general, seem to bleed into each other and the fact that it’s late June 2020 is mindboggling since the first half of this year was a blur. With that said, we may not have a newsletter next week as it gives me some time to catch up on some of the list of ‘Things to Do’ that I’ve been ignoring. For those in the US, especially my friends and family in CA & MI please take care of yourselves. It seems that Covid-19 infections have crept back up so It’s important to stay diligent. We are finalizing the participants for the US China Series virtual conference scheduled for Thursday, July 23rd and I think we've been able to bring together alot of diverse minds that should make for a great conference so I hope you carve out that time now and plan on attending. More details will follow next week! On to the news that’s fit to print. IN THE NEWS: - The state of Florida decides it wants in on the EV push. The governor signs an electric car bill that requires the creation of a master plan for charging stations throughout Florida in order to encourage the sale of EVs. - Americans LOVE their pickup trucks, especially the expensive ones – Just ask Ford. This article digs into the why’s. - Trump administration temporarily suspends the issuance of H-1B visas. What’s everyone’s opinion of this? TRENDING ON SOCIAL MEDIA: - Mobility is for the BOLD. Didi throws out what I think is a pretty aggressive statement: They will have 1M autonomous taxis on the roads by 2030. Now, I am assuming they’re referring to vehicles with no steering wheels, gas, brake pedals, and no safety driver. That’s 10 years away so the folks making those bold claims may not even be at the company then. That said, alot can happen in that timeframe so with still 9.5 years to fulfill that claim, I am not counting Didi out yet. What, if any, response should we expect from the OEMs and their other competitors here in China? So far …crickets. - RIP Segway. The product, not the company. - The Enzo Ferrari biopic has been greenlighted for a late 2021 release date. Sweet. PRODUCT & SERVICE INTRODUCTIONS: - US Bound VW ID Crozz aka ID 4 photos and specs leaked. It looks nice, in a non-offensive sorta way. Will it really compete against the Model Y though, that remains to be seen as VW is a new entrant to EVs and the Model Y will most undoubtedly be the ‘’Reigning Champ’ by the time the ID 4 launches later this year. That if VW can get the bugs sorted on the software. Just a minor detail. - Rad Power Bikes entry into the sub-$1K price point for electric bicycles. There’s plenty of quality choices for e-bikes on the top end (>$3K) so I think this Rad Bike should open the door to a growing number of entries at this lower price point. - Here’s a thought. What if an electric-mini car was disguised as an electric bike and could use the bike lanes to get around but had enough room to grab groceries or do deliveries? Meet the CityQ Car-eBike. The advantage of these vehicles with the hybrid form factors is that policy still needs to catch up to them. If by chance they become popular enough, then cities may just have to incorporate them into their urban ‘plans.’ That’s unless like in China, where these types of vehicles have existed as long as I’ve lived here, the drivers decide to drive and park them on the sidewalks. We will see more of these types of vehicles too, take my word for it! With battery tech getting better and better, the possibilities for these types of intra-city transports are endless. —— This weekly newsletter is a collection of articles I feel best reflect the happenings of the week or important trends that have effects on the automotive and mobility sectors here and in the US, I also provide a point of view that I hope educates and sparks debate.
The Sino Auto Insights team
EVs The Chinese govt. raising the stakes on NEV production with an update to its NEV credit program. To summarize, NEV quotas have been targeted at: 2021 - 14%, 2022 – 15%, 2023 – 18% The Chinese govt. hopes that this pushes the sector towards EVs being 25% of all sales in 2025. The program is modeled quite like the one implemented in California in 2012(?) all the way down to the option of purchasing credits from other automakers to meet the target in lieu of the OEMs not selling enough EVs themselves. This created a pretty healthy revenue stream for Tesla in the early days. We still have 4.5 years to hit that target goal and I wouldn’t count China out right now, but 25% of all vehicles seem pretty aggressive. Bet money that there will be a lot of ‘gaming’ the system and trying to find loopholes in order to meet the targets. #NEVs #creditsystem #25by2025 #China #quota Will Byton survive past 2021? Here’s a quick follow-up on Byton - Last we heard from them their boss was Instagramming photos of some M-Byte mules that looked to have hand-built in their plant in Nanjing. According to Technode’s Jill Shen, it seems that they’ve not been able to attract investment to close their Series C round which has left them exposed. So much so that according to the Technode piece, they have not paid their employees for 4 months, the ones they’ve not furloughed that is. Further, they’re not able to pay for the electric bill for the manufacturing facility so that seems to be shuttered as well. The available capital for the EV sector has been shrinking for the last 3 years and with this latest news from Byton, maybe its evaporated completely. I tweeted out my prediction (follow me @sinoautoinsight) that they get bailed out by a local / provincial govt. within the next few months, when the investor has the most leverage. It doesn’t help that the M-Byte has to be a nightmare to manufacture. #Byton #Mbyte #Nanjing #cashstrapped #willworkforfunding #thewellisdry OEMs Volkswagen is trying to substantially up the difficulty levels of their pivot to EVs. Writing code is hard. Writing code well takes time. Currently, VW writes essentially none of the code that is going to run their EVs nor the infotainment systems that they’d like to eventually power the monetization efforts from the data they collect from their customers. OK, they write about ~10% of it according to Reuters. 10%?!?! If I round down, that’s pretty close to 0%. Now VW announces that they want to open source their vehicle’s OS?? As if life wasn’t complicated enough for them? It’s mindboggling to think that they will be swapping their entire lineup of ICE vehicles out, mostly sedans BTW, with EV SUVs to try and remake the company and leave it’s dieselgate past behind, and think they could get away with not building out an internal software development (dev) team to natively design & develop the hardware and software together which is ALWAYS going to be the better solution as evidenced by the software bugs of their ID 3 at launch. I know the traditional OEMs are ‘light’ on development talent within their ranks but to only write 10% of all the code that’s going into your vehicles is quite pitiful – dare I say negligent! If this is true for ALL the OEMs, I’ve spoken with a few and some are much better off than others, Tesla’s leadership is not going to be overcome by anyone GLOBALLY any time soon. And I am talking within the next 10 years and by then all bets are off! Getting back to VW, just over the last couple of weeks the VW Group has announced investments of:
In the next 10 years, vehicle design WILL not be a top priority for the majority of mobility customers & users. What’s going to matter is the user experience which essentially is ALL software - if it’s been designed well and reliable – And I mean bulletproof. We are talking about people’s lives so it’s going to take amazing design, care, deep understanding, redundancies, and that iterative process of software development that even many of the successful tech companies still currently lack. It’s taken Silicon Valley a generation to build out that kind of software design & development expertise with Tesla being a part of that ecosystem. Between all the future cross-border energy and focus needed to successfully integrate these HUGE investments, you’d think the last thing VW needs is to also manage multiple contract manufacturers and agencies responsible for arguably the most important parts of the vehicle. You’d also think that some of that 5 stacks of high society that they committed to these investments could’ve been redirected to acquire a proper dev team. $500M would’ve bought you a pretty solid crew! I thought they were moving very aggressively into the space and wondered how they were planning to make that transition. Now I know – leave the tough stuff to someone else or a bunch of someone else’s. #VW #softwaredevelopment #notmygig #outsourced #wewilleventuallygettoit MICRO-MOBILITY Rumble Motors re-shoring for the sake of its quality and customers. We can see in this example; the numbers work for Rumble Motors to move manufacturing from China to the US. Not only are half of their current customers based here, but the quality out of their Chinese contract manufacturer (CM) was such that they would’ve likely needed to put an office in China to babysit the CM in order to achieve and maintain the desired quality levels for their bikes that they were looking for. Oh yeah, and the tariffs played a role too. Setting aside the tariff situation, any company selling a large, complicated product that if built incorrectly could severely harm someone, and thinking they could do spot ‘pop-ins’ to check on their CM, especially when launching new products was a bit naïve, and / or they had a sh*tty agent. This could just be a rookie mistake too since ANY CM, be it in the US, China or Vietnam always needs a bit of hand-holding at the beginning of a relationship. Most established companies, even if they’ve worked with their CM for years, will normally fly their folks in and ‘live’ at the CM to oversee important launches. #RumbleMotors #madeintheUSA #onemoreebike #californiasunshine #reshoring When you and your e-bike become one. Although just a study for now – this is AMAZING stuff. By analyzing electrical signals in the occipital region of the brain, the part responsible for vision processing, the system can determine when the rider senses danger ahead and shuts off the bike’s electric motor. There are two parts to vision processing; central and peripheral vision. Central vision is just what it sounds like objects are in focus and easily recognizable. Peripheral vision is the vision around the edges where things aren’t so focused but you can still perceive them. Depending on the electric signals, a person’s vision will either be centrally or peripherally focused. When your vision is peripherally focused the rider doesn’t sense any danger so the motor will accelerate. If the rider switches to central vision, it could be that there is something dangerous ahead and consequently shut the motor down in theory helping the rider avoid an accident. #centralvision #peripheralvision #mindmeld #mindandbikeareone #nextlevelstuff URBAN MOBILITY Car-free city centers will become more and more common. A pretty interesting 15 min. video for those that are curious about the evolution of car-free zones in city centers. I’ve followed car-free zones, streets, and / or areas within a city where private passenger vehicles are prohibited, as I’ve gotten more into complete transportation network solutions that involve the private & public sectors. London was the OG when in 2003, the city began taxing anyone that wanted to drive their vehicle into city center on weekdays. Recently, cities like San Francisco, NYC, Seattle, Madrid, and Paris have all followed suit with their own policies, small and large, to limit the traffic through certain areas of their cities. This video specifically focuses on NYC & SF, of which SF is a city I am very familiar with. The results are heartening and as I’ve stated in previous newsletters, as long as the urban planners take into consideration the entire population of a city and the net effects on each and everyone so that any change doesn’t disproportionately help / hurt one over another I am all on board for limiting private vehicle usage in human dense areas. #citysolutions #NYC #SF #juryisstillout #morecitiestofollow #nocarsallowed AVs Ford to launch Active Drive Assist to compete with GM’s Super Cruise and Tesla’s Autopilot. This is likely a derivative version of the AV system developed by Ford’s AV partner Argo. It won’t actually be available until Q3’21 so I am not certain why it was announced last week. That also means by the end of 2021, we should be able to do a side by side by side comparison with the 3 OEMs autonomous driving systems. #Ford #ActiveDriveAssist #latetotheparty #betterlatethannever #MustantMachE #SuperCruise #Autopilot The REAL difference between Tesla and just about everyone else trying to the first to Level 5 autonomy. This is a ~30 min. video by Andrej Karpathy, Tesla’s Head of AI & computer vision – otherwise known as the guy in charge of Tesla’s Autopilot. Where most AI companies have zigged, Tesla has zagged by electing not to use LIDAR as part of their HW stack for autonomous driving. That means that they rely solely on computer vision to ‘drive’ their vehicles. Most others, including Waymo, Uber, Aurora, Argo, just to name a few are using HD mapping along with LIDAR to try and solve the ‘self-driving’ challenge. Karpathy admits that their method of solving the problem is much harder since every street driven is just like seeing it for the first time vs. the competition uses the HD mapping (that has to be within cm’s of accuracy) to draw the box for the vehicles to ‘drive’ in. Karpathy also argues that these HD maps need to be constantly updated whereas Tesla’s Autopilot system just gathers more data, reinforcing the machine learning system effectively allowing for scale without the need to always update the extremely detailed HD maps. These are principle differences in approach and like a good friend recently said to me as we were discussing mapping, I am a ‘Ph.D. or two short’ of completely understanding why one approach would be better than the other but that’s not going to stop me from watching the video again so I can try to ask better questions when I do run into the guys that will make AVs possible. #Tesla #computervisioin #HDMapping #everyoneelse #harderproblemtosolve
Sino Auto Insights is a Beijing, China-based market research and advisory firm that specializes in assisting companies analyze, strategize, and develop products and services that will shape the future of mobility and transportation. Members of our team have experience working in Detroit, Silicon Valley as well as here in China across multiple sectors and functions as entrepreneurs as well as working at larger companies like Apple, Google, Amazon, GM and FCA, and many others.